Hockey throws fuel on the fire

"The world is changing remarkably, and whilst you would have easily assumed 10, 15 years ago that, for example, the GST is going to be an enduring tax ... with global trade, with the development of internet commerce, with not just the transaction of the sale of goods over the internet but increasingly services, there are going to be more and more goods and services that are provided from offshore under free-trade agreements that is going to miss that net," Mr Hockey told Sky News on Sunday.

"My view is you would have to question whether in 30 or 40 years' time taxes like the GST or company tax will be around," he said.

Related Content

Mr Hockey said Australia faced "intense competition" on tax rates from the United Kingdom, New Zealand, Singapore, Hong Kong and other countries.

"Capital is more mobile than ever before. Companies are no longer particularly wedded to individual countries – they will move around the world," he said.

Advertisement

Australian Chamber of Commerce and Industry chief executive Kate Carnell said uncertain tax bases were one of the great challenges facing governments.

"What tax bases look like in the future, when you've got a truly global economy … It's certainly an issue that we're all grappling with. The only solid tax bases are ones associated with land, because you can't move it," she said.

Even revenue from direct income tax was under threat because of labour mobility and "disruptive" new employment arrangements, she said.

Ms Carnell said the problem underscored the importance of developing "solid and consistent" global tax rules.

"Because if we don't we're all in trouble fundamentally, because people will pick and choose on where they pay tax based upon what's the best outcome for them and for their companies."

Ms Carnell said her organisation was contributing to working with the International Chamber of Commerce and the Organisation for Economic Co-operation and Development to develop such a global approach.

Budget expert Chris Richardson, of Deloitte Access Economics, said the threats to GST and company tax revenue were "real and growing."

"Having said that, GST and company tax will be providing revenue for many years to come," he said.

Mr Hockey said the government would release a discussion paper on tax reform next month.